Category Archives: bribery

“China instability rising with fungible rule of law”

Well… then there’s this. In the age of Neil Haywood and Chen Guangcheng, does anything about this story sound far-fetched?

Warren Rothman, a San Francisco lawyer, was having dinner with a Chinese legal colleague in Shanghai a few years ago, he said, when the colleague “blurted out” that he’d helped pay a $3 million bribe to ensure that his client, an iconic American company, could win a contract to work in China.

Rothman was stunned. He berated his younger colleague, a legal assistant for a Western law firm. He tried to defend himself and “looked very embarrassed,” Rothman recalled. Then within days, Rothman alleges that he found himself trapped in a Kafka-esque nightmare — poisoned, placed in a mental hospital, tortured and tormented in ways that were intended to trigger a fatal stroke to make sure he never revealed what he had learned about the bribe.

“Why’s it taking so long?” Rothman claimed one of his Chinese torturers mused to another one as he sat drugged, strapped to a chair. But unlike Neil Heywood, the British businessman who died under suspicious circumstances in China last fall, Rothman managed to get away and return to the United States.

“The only difference between me and Neil Heywood,” Rothman said, is that he’s not corrupt, and “I didn’t come home in an urn.”

Rothman supplied emails, documents from the American Consulate in Shanghai and other evidence that largely backed his story.

Earlier this month, in fact, labor rights activist Li Wangyang was found hanging from a sheet tied to the prison bars of his hospital room window. Government officials called the death a suicide. The problem was, Li had just been released from more than 20 years in prison. He’d been perfectly healthy when first jailed, but repeated torture had left him blind and nearly deaf, prompting the widely asked question: How could he have managed to find the sheet, fashion a noose and choose a place to tie it?

Li was just the latest in a long string of suspicious deaths. Last August, Xie Yexin, a Hubei Province official who’d made a name for himself as an anti-corruption campaigner, was found dead in his office — stabbed 11 times in his chest, neck and abdomen. The knife lay next to his body, its handle wrapped in tissue paper. Government authorities called that a suicide, too.

“It’s not a criminal case, and we have no obligation to investigate,” said Wang Jianping, a local police official.

All of this comes as “the factors for instability in China are rising,” Kamm said. “The economy is falling; home prices are dropping; there are more bankruptcies. The government is certainly very worried,” and “there’s a massive expansion in state security spending” as public anger and ferment rapidly escalate nationwide, causing the government to grow ever more consumed with keeping control of a fast-changing society.

China now spends $110 billion a year on internal security — more than is budgeted for its military. Sending more than 1,000 police to a remote village on short notice, for example, is not inexpensive.

The $3 million bribe the legal aide described went to a shell company, Rothman said — one that Chinese government officials almost certainly set up. And without government help, he added, the legal aide could never have carried out the complex plan to commit him to a government mental hospital and try by various means to induce a stroke. Earlier, Rothman, 68, had told the aide and others he was vulnerable to strokes.

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“Beijing Police Tackling Interceptors, Black Jails”

I’m struggling to come up with an analogy here. It’s like the fox guarding the chicken coop… from dogs? And also all of the chickens are also foxes? Apparently someone is trying to get Beijing police to stop interceptors from preventing petitioners from reaching the government in Beijing… but the interceptors are also following orders from up top, so… what?!

Last year, Chinese media exposed the workings of one of China’s darkest industries: security firms that prevent citizens from filing complaints with central authorities, and resort to aggressive or violent tactics to detain them in black jails.

Reports at the time focused on how the Beijing-based Anyuanding Security Firm—at the behest of officials from other parts of the country seeking to hit state-mandated targets for social stability—manhandled and detained petitioners who had traveled to the capital to express discontent about their local governments. The firm made 21 million yuan in profits in 2008, and employed 3,000 people before media reports exposed its activities.

Now, Beijing police say they are cracking down on the informal business of “intercepting,” by strengthening regulations, requiring certification and levying fines for what they said is an illegal practice.

“We draw the line at interception,” said Beijing Public Security Bureau (PSB) official He Gang to Beijing Times. “This line cannot be crossed.”

“Security guard companies are a mess,” Zhang said, noting that some security guards resort to violence to catch and stop petitioners.

He Gang said no certified firms participated in intercepting this year. The new rules stipulate that firms will pay a penalty between 20,000 and 100,000 yuan for every illegal detention that occurs.

But if the petitioners reach the government and actually start petitioning, all hell breaks loose. Maybe this ‘increased regulation’ thing is just a way for Beijing police to extract bribes from interceptors without actually interfering in their intercepting? We’ll see what comes of this (likely nothing).

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“Architect: Beijing airport damage not design flaw”

Remember all the incredible infrastructure projects and architectural masterpieces Beijing threw together for the Olympics? Someone should write a book about what’s happened to them since then, what with Bird’s Nest designer Ai Weiwei facing down the government and now reports of problems with Terminal Three of the Beijing airport caused by… wind. Yep:

One of the architects behind the busiest airport in Asia said Thursday that substandard materials or installation — not design flaws — are likely to blame for wind blowing parts of the roof off Beijing’s three-year-old Terminal 3.

The airport is the result of a frenetic Chinese building boom that has produced numerous architectural marvels, though some of the iconic new projects have been hit by quality and safety problems.

State media say passengers reported seeing bits of white and yellow roofing material blowing across runways and through parts of the $2.8 billion terminal on Tuesday. In statements issued earlier this week, the airport said no one was hurt and operations were not affected.

“If the products provided by the suppliers were not up to their highest standards, or if the individual items were not installed properly, then this kind of thing could happen,” said Shao Weiping, an architect with one of the firms that collaborated on the structure, the Beijing Architectural Design and Research Institute.

I don’t know anything about Mr. Shao, but given the constant flow of problems caused by poor installation that really wouldn’t surprise me. Some huge sum of money is blocked off for a project, put in a bag, and then passed from person to person until eventually arriving in the hands of the actual construction company, which barely has enough money for materials after skimming their own bit off the top. If the regulators come by at all, it’s just to pick up their bribe.

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“Corruption may undo China’s economic miracle”

From Victor Shih, a great FT blog post about exactly how bribery figures into construction projects great and small here:

According to details released by the Chinese media, the Jing’an government invited bids for a project to insulate a teachers’ dormitory. Not surprisingly, a company wholly owned by the Jing’an District Government, the Jing’an Construction Company, “won” the bid, but then gave the Rmb30m project to its wholly owned subsidiary Jiayi Company, which had little experience in this kind of project.

After paying government officials bribes to obtain this contract, Jiayi proceeded to farm out various aspects of this project to sub-contractors who paid Jiayi management the highest bribes.

In some cases, the work was further sub-contracted to foremen, who also had to pay sub-contractors bribes. At every level, guanxi and the amount of bribes determined who received the contract, not quality, safety or track record. In the end, a welder, hired precisely because he was inexperienced and therefore cheap, accidentally dropped his torch, which set off the fire.

Given the dominance of the state at every level of government, government officials learned long ago that the best way to make some money on the side was to form their own companies, which “bid for” and often won lucrative contracts from the government and from state-owned enterprises.

In many cases, these parasitic companies do not do the contracted work themselves but instead farm out the work to the highest bidders. The owners of these connected companies, often officials themselves or their close friends and relatives, can make money without doing anything. It is rent-seeking in its most naked form.

As this “unspoken rule” way of business proliferates to every corner of the Chinese economy, quality, safety, and basic trust all go out the window, replaced by the subcontractors who could pay the highest bribes.

Although a small number of people are enriched by the system, the vast majority suffers from its consequences. This corrupt system of subcontracting may be partially responsible for the high-speed train crash last month; it is also responsible for the prevalence of radioactive material in China’s homes, as noted by an earlier piece on beyondbrics.

It likely is partially culprit to the thousands of industrial accidents and food and product safety issues that crop up in China every year.

Nothing a little transparency and rule of law wouldn’t (at least) partially clear up, but the Communist Party seems convinced that those are bourgeois imperialist concepts designed to destroy China, so they’ll continue to stalwartly oppose them for now.

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“Who Is the Guilty Party?”

Xujun Eberlein at InsideOutChina has translated a story from a friend, which reveals the omnipresence of bribery in everyday life here. The entire thing is definitely worth a read- here’s the beginning:

Two years ago, I bought a tiny flat from a stranger. While making some minor changes to the old interior, the electrician I hired found problematic wires, and that the electricity meter outside did not work. The electrician, who had more than 20 years of experience, concluded that the previous owner had messed about with the meter in order to steal electricity. He pointed to a jumble of wires and tried to explain – why this wire did not connect to the meter and that wire did not connect to ground – only to make me further confused. Finally I got the gist of what he was saying: the previous owner installed a very small switch inside the apartment, and reconnected the meter to the switch, which fully controlled the meter’s readings. As the result, if he had used 100 kwh of electricity, the meter would only read 10 kwh.

This was the first time I heard of such a thing, so I was at a loss as to what to do. I asked the electrician, “Could you please rewire the meter to its original design for me?” He teased me, “Why should I? Isn’t it better for you to save electricity cost?” I waved my hand and said, “Drop it, I’m a coward, I won’t be able to sleep if I steal. The money saved this way wouldn’t even be enough to buy me sleeping pills.”

The electrician fiddled with the meter, but in the end couldn’t do much to help, because there was a red seal in it that said, “Do not remove seal, Electricity Bureau only; otherwise bear full consequences.” He said he couldn’t take the responsibility.

I called the previous owner, who neatly denied everything. His voice was full of surprise: “Really? Really? I had no idea! How could it be?”

With no choice, I went to the housing estate’s property management, hoping they would help me solve the problem. The director was a young man who looked like he was just out of college. He patiently heard me out and calmly said, “Things like that are not our responsibility. We wouldn’t dare to touch that seal either. Why don’t you call the Electricity Bureau, perhaps they will send someone for you? But…” he hesitated a few seconds and then said, “For this kind of thing, you know, the Electricity Bureau is very hard to deal with…” He stopped again, his expression looked restrained.

Coming out of the property management office with a foggy head, I ran into Manager Zhou of the real estate agency. After listening to my story, he warned me against acting rashly. “I have heard things like this before,” he said, “the Electricity Bureau only holds the current owner accountable. Change electricity wires without authorization? Fine 5000 yuan. You don’t pay? They cut your electricity immediately.”

Do take a few minutes and read the rest.

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